Director and founder in one person, do I have to pay a salary?

Can a director work without salary?

Important! There are several ways to prevent a director from paying wages. However, they cannot be called safe, since each option carries certain risks.

Is it necessary to pay wages to the general director of an LLC?

Let's assume that you have an organization with several founders. In this case, the head of the organization works in the company on the basis of an employment contract as a director or general director. In fact, in such a situation the director is an ordinary employee. This means that the condition of payment of wages is mandatory under the employment contract.

Important point! The general director must be paid a salary even if he is one of the founders of the LLC. In this case, in no case should you pay a salary lower than the established minimum wage (minimum wage).

Method 1: Pay the director only for time worked

The head of the company can be transferred to part-time work, and from any date. To do this, you will need to draw up an additional agreement to the employment contract, as well as issue an order (93 Labor Code of the Russian Federation). The order indicates the start date of the new working time regime, the length of the working day, wages, as well as the period for which such a regime is introduced. The director will work part-time, for example, only two hours, or only one day a week, instead of five days and eight hours. Insurance premiums and personal income tax will also need to be withheld from his salary; accordingly, he will not be able to receive any benefits (

Claims from the Federal Tax Service

The absence of an employment contract with the manager may also lead to claims from the tax authorities. The organization has the right to take into account expenses related to the payment of wages to employees when forming the tax base on the basis of paragraph 1 of Article 255 of the Tax Code. However, in accordance with paragraph 21 of Article 270 of the Tax Code, remunerations accrued to managers and employees, but not provided for in an employment contract, do not reduce taxable profit. That is, in order to include the manager’s salary in labor costs, it is necessary to confirm that it is provided for in the employment contract. At the same time, established practice shows that such expenses can include the manager’s salary even in the absence of an employment contract, but you must be prepared to provide the Federal Tax Service with additional evidence confirming the reality of the costs (decision to appoint the sole founder to the position of head of the organization, staffing table, documents, confirming payment of wages).

Method 2: Pay dividends instead of salary

Paying dividends to a director instead of a salary is quite dangerous. Because upon inspection it turns out that the company is hiding employment relationships. Dividends are paid:

• once a quarter;
• based on the net profit that remains after paying taxes;
• by the owner's decision.

If you do not follow these rules and pay dividends monthly, the tax authority may decide that the dividends are a salary, which means they will charge taxes and contributions on this amount .

Background

Back in 2006, the Federal Service for Labor and Employment expressed its position on this issue. Thus, in letter dated December 28, 2006 No. 2262-6-1, Rostrud indicated that in such a situation, there is no employer in relation to the general director, and therefore, in this case, an employment contract with the general director as an employee is not concluded.

note

There is no common position yet on the issue of the need to conclude an employment contract with the director - the only participant, however, the regulatory authorities still recognized the emergence of labor relations, including on the basis of the director’s actual permission to work.

Later, in 2013, Rostrud supported its position in letter dated March 6, 2013 No. 177-6-1, indicating that an employment contract is an agreement between an employer and an employee, that is, a bilateral act. If one of the parties to the employment contract is absent, it cannot be concluded. Thus, labor legislation does not apply to the relations of the sole participant of the company with the company founded by him. Rostrud also explained that the only participant in the company in this situation must, by his decision, assume the functions of the sole executive body - director, general director, president, etc. Management activities in this case are carried out without concluding any contract, including an employment contract .

Method 3: The director is on vacation at his own expense

The manager may be on vacation at his own expense, but the company cannot remain without a director. This means that his responsibilities must be transferred to another employee. If the director’s responsibilities are not delegated to anyone and he wants to sign the documents himself, then each time he leaves vacation he will need to be formalized and paid for. Moreover, the director is paid for the full day of work, and not just for a few hours. If the director is on vacation and at the same time signs documents, then this approach may lead to claims from the inspection authorities.

Important! If the director is on vacation, then he does not have to perform his duties, including signing documents. In this case, the regulatory authorities will conclude that the company sent the manager on vacation only based on documents. If, while on vacation, the director signs documents, they may be declared invalid. In addition, the company will be assessed a fine for non-payment of wages in the amount of 30 to 50 thousand rubles. The director will be fined in the amount of 10 to 20 thousand rubles.

If the company is not operating, then it is possible to send the manager on leave without pay, only if he does not sign documents on his own behalf. When making an application for leave, he must indicate some reason that is considered valid. For example, family circumstances. An order or statement cannot indicate that the director went on vacation due to lack of orders. In this case, the inspectors will consider such leave to be downtime, and the company will have to pay for it in the amount of 2/3 of the average salary.

Employment contract with the founder-director

The legislation of the Russian Federation does not give a direct answer to the question of whether a company should draw up an employment contract in such a situation. The Federal Service for Labor and Employment believes that an agreement is not required. In letter of Rostrud No. 2262-6-1 dated December 28, 2006 it is stated that the work of the director is regulated by the 43rd chapter of the Labor Code. Article 273 of the Labor Code of the Russian Federation indicates that the requirements of this chapter do not apply to the head of the company if we are talking about its sole owner.

Article 56 of the Labor Code of the Russian Federation states that an employment contract is signed by the employer and the employee, that is, the labor relationship is bilateral. In the situation we are considering, this is impossible. The same person cannot sign a contract on behalf of both the employee and the company. From this it is concluded that in our case there is no possibility of signing an agreement.

This point of view is also shared by the Ministry of Health and Social Development of the Russian Federation. Letter No. 22-2-3199 dated August 18, 2009 states that having the same signature on both sides is unacceptable (according to Article 273 of the Labor Code of the Russian Federation). Thus, if the company does not have another founder, an agreement is not needed.

There is also a different perspective on the situation. Thus, the Federal Arbitration Court of the Northwestern District confirmed that, in accordance with Art. 11 of the Law “On Limited Liability Companies” dated 02/08/1998 (Law No. 14-FZ), a citizen can establish a company alone. In accordance with the first paragraph of Article 40 of this law, the general meeting of the founders of the company elects its sole executive body (this may be the general director, president, etc.) for the period determined in the charter of the LLC.

This person is not necessarily a co-founder of the company. The agreement between the company and the manager is signed on behalf of the LLC. This must be done by the person leading the general meeting of participants where the election took place. In addition, an employment contract with the general director can be signed by a company participant who is authorized for this by a decision of the general meeting of founders.

That is, the situation when the sole owner of a company assumes the functions of the head of the same company does not run counter to legal norms and the charter of the company. The position of the court is set out in the resolution of the Federal Antimonopoly Service of the North-West District dated April 19, 2004 No. A13-7545/03-20.

When drawing up an employment contract with the general director, whose role is the sole owner of the company, you must remember the following:

• The CEO must be elected by the board of directors. However, in our case, when there are no other participants in the company, and the employment contract is signed by one owner on behalf of the company, the Company itself acts as the employer;
• Directors are hired on a general basis, in accordance with Art. 68 Labor Code of the Russian Federation. The decision of the sole founder of the LLC to appoint a manager forms the basis of the employment order. This order must be signed by the manager himself.

We will not pay the director's salary. How to apply?

Arguments for non-payment of wages will differ depending on the existence of an employment contract:

2.1 Do not pay the director’s salary if an employment contract has been concluded

In this case, the basis for non-payment of salary will be vacation without saving salary . To complete it you will need:

• application from the director to grant him indefinite leave without pay. Sample text - I am going on leave without pay for 300 calendar days from __ to __ due to family circumstances;
• an order granting the director indefinite leave at his own expense.

This argument is common because During the period of unpaid leave, the director may continue to exercise his functions.

2.2 Do not pay the director’s salary if the employment contract is NOT concluded

The absence of an employment contract in itself is confirmation of the absence of an employment relationship and the obligation to pay salary. At the same time, the main ways of arguing for non-payment of salary to the director are as follows:

• Dividends are paid from the organization’s net profit no more than once a quarter based on the owner’s decision;
• Directing all profits to business development - in the first stages, the organization, as a rule, directs all profits to the development of the organization, which is a legal way to reduce the amount of dividends paid.

Why is it worth paying the director at least the minimum salary in an LLC without employees?

The LLC has no employees and the director is not paid a salary. But the activity is actively underway, which raises questions from tax officials regarding the lack of salaries and taxes on them.

They ask at the “Red Corner of an Accountant”.

“What to do: LLC without employees and without accruing salary to the director (founder and general director are one person). Form of activity - agent, work for an agent's fee. STS 6% (just in case). Sometimes they accepted payments from clients to the director’s personal card, withdrew this money, deposited it into a bank account, and transferred it to the supplier. A receipt for cash receipt was punched and issued to the client. Taxes on the remuneration were paid to the LLC. We can confirm the chain.

But there were amounts transferred by clients that we left on the same card and did not withdraw, but replaced with our own cash, not the LLC’s. There are no acts or other evidence of this, just an “exchange”.

The tax office sent a notification that for 2022 the LLC has income from which insurance and other contributions have not been paid. We explained that there are no hired employees, but the tax authorities insist that the LLC received income (we requested a breakdown of the amounts from the income they indicated, but have not yet received a response). Read it on the booze. forums that the tax office often links the director’s card with the company, that this is happening legally.

Therefore, we came to the conclusion that the issue was the acceptance of payment on the director’s card; For 2022, we calculated the incoming amounts for acquiring, remuneration, returns from suppliers, and incoming loans for individuals from the bank for 2022 - the amount is less than the amount requested for tax clarification.

What to do in our case? Report on transactions using the director's card? How then can we avoid the accrual of personal income tax and other taxes on the amounts that we did not withdraw from the card (there is a cash receipt for the client depositing cash), but how can we prove that we deposited our cash into the account and left it on the card so that not to drive them back and forth? We will be able to confirm transfers/payments/refunds; we conduct activities only through a bank account.”

Here's what they're saying about this in the comments:

“Perhaps it means that the tax office considers all receipts to the account as income, and not purely agency fees?